Here’s the first thing you do with Adobe (ADBE) tomorrow morning. (December 13, 2018)
Adobe ( NASDAQ: ADBE ) reported after the bell. You can see where the stock is, it’s down just a little bit here. But if you are kind of naturally bullish you are going to look at this and say, “Oh man, they disappointed but the stock is still holding right at the 50, right at the 200. This is great a time for me to buy this stock. I’m in.” I would say, “Don’t do that.”
First of all, this is really the way the stock traded. It always happens; right after a high profile company reports numbers the stock will swing in a big way, typically both ways. Typically the first way is always wrong but if it’s not then the second way is wrong, which actually means both ways were wrong. That is just the nature of volatility.
But where the stock is trading now, right here at 245.00, that’s a pretty nice level. But this move here, from 210.00, then what was ultimately up here to 260.00 but then finally settled in here. This is earnings anticipation. There is not one person that bought here that didn’t know that Adobe ( NASDAQ: ADBE ) was reporting here. And so there is some optimism near-term, recently.
Over the past few weeks there is some optimism that the company is going to do well, they’re going to report strong earnings and you want to be there, right? So the company doesn’t do that, which means that any of these buyers that bought over the last few weeks, they’re all up. Anybody who bought here is up. Anybody who bought here in the red box is down. So what you are going to have is those that bought up here that were hoping for some kind of relief, they’re not going to get it so they are going to be selling.
At the same time all these guys here are saying, “Hey man, I got this at 210.00.” “Well, I got it at 220.00.” Well, now the stock is up at 240 something or other. They see these guys selling so what do you think is going to happen tomorrow? If this thing cracks the 200-day moving average this thing is going to start selling off. I have no idea how low it is going to go. I am not even going to posit a guess.
I will just say this, when a company that’s done what Adobe ( NASDAQ: ADBE ) did, reports earnings and they are disappointing, I don’t care what the number is, they are disappointing because the stock is down. When that happens you need to get out of that stock. Think about it this way, if you can get out of this stock here, you were holding it over earnings and you can get out of this stock here, then you should consider that a gift. Because in this kind of market where it is kind of like pull the trigger first and then see who you shot later, this stock could be down 10 percent.
So I would say if you bought down here take the money and run. If you bought up here take the money that you can and don’t ever do that again.
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